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The rule of 72 is an easy formula that can be used to estimate the number of years required to double the invested money at a given annual rate of return.
The rule is great for mental calculations to quickly indicate an approximate value. It may also be useful to compute the annual rate of compounded return from an investment given how many years it will take to double the investment.
What Can the Rule of 72 Tell You?
A shortcut for:
How to calculate the Rule of 72
By dividing 72 by the annual rate of return, you can obtain a rough estimate of how many years it will take for the initial investment to duplicate itself.
If you’re the technical type and want to know why the rule of 72 works, then go here. This will give a lot of the X, Y’s and Z’s or is it P’s and K’s? After all its algebraic. Remember, treat your money with emotion you’re certain to lose the money game. Treat your money with math and science and you’re sure to WIN the money game.
Compound interest is either working for you or against you. Deemed the greatest force in the universe by Albert Einstein, understanding how it works is the key to winning the money game. First, what is the definition: Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. It works against you by paying interest in the form of a loan or working for you with earning interest by depositing principal into an investment.
It is also helpful to compare something to another for additional perspectives. Watch this video that compares simple interest to compound interest. (Compound Interest) If you’re the calculating type here is a link on how it is calculated. (How to Calculate Compound Interest)
Albert Einstein once said that “compound interest was the most powerful force in the universe.”
Compounding interest is earning interest on interest. It’s what helps turn money into more money. For anybody not just the wealthy. Investors refer to it as “magic of compounding” for the incredible way it grows your money at an accelerated pace. Compounding can super-charge the growth of your savings account, but it’s also relevant to investments. To get the greatest benefit of compounding, reinvest and don’t spend the earnings. To increase compound growth, invest more, let your money grow for a longer period of time, and find the best return rate you can. (Compound Interest Napkin Presentation)
That’s how it all started, this trek of mine into internet marketing. For years I had played with a website, omagic.com. I knew all the information I put on there, and I got it to a place where it was “good enough.” Achieving such a lofty place as “good enough,” I proceeded to let it coast. From my ill-informed perspective, there was no need to do significant maintenance on my site. I was getting phone calls, and some of them were actually prospective clients.
Then in 2010, I realized I was barely getting any calls. Even the auto-dialer sales calls had ceased. So I did what I supposed any person looking for a party magician would do, I searched on Google. In the past, I had been on page 1 to 3, and I had assumed that was good enough. But on this day, I was not on page 1. Nor was I on page 2, or 3 for that matter. There were lots of other magicians on those pages, many of my friends and acquaintances, and several ones of whom I had absolutely no knowledge, and I wasn’t sure they were the “Best Kid’s Party Magician in Dallas.” I kept clicking the Google pages, one by one until I finally rested on page 13. There I was, about midway down the listing, about 125th. Of course I knew that no one would be so persistent to search that deeply, and I realized I would have to do something. That fateful search was in October of 2010. By December, I had made enough corrections to my site so to make it back on page 1 of Google. The phone rang, life was good.
“By December, I had made enough corrections to my site so to make it back on page 1 of Google. The phone rang, life was good.”
Google has gone through several changes since then. Actually, they go through changes more often than you think. But one thing pretty much remains the same. Google wants to make money. They do this by presenting to their users the BEST results for their search query. To get the best results, Google relies on authoritative content.
Boiled down to the simple elements, a one page thesis on the benefits of hiring a kids party magician, could get a high ranking in Google if it helps them make money, i.e. it provides quality results for someone’s query. The more people reading and referring to that one page, the more it is viewed as authoritative content. So, if you write a page, share the link to that page on social media (facebook, Twitter, Pinterest, Reddit, etc.) and then other people read and share, it becomes popular and in the eyes of Google, authoritative. Now when someone searches for the “Benefits of hiring a kids party magician”, if you have performed all of the necessary steps, you could have an article that Google ranks number 1. If you can ever get CNN, or ABC or other highly authoritative sites to link to your article, it gets very easy to be number 1. Where are some other authoritative sites? Educational and government sites are very authoritative (.edu, .gov.) Also, in the field of magic, www.magicsam.com, www.magician.org, and our very own www.dallasmagic.org are authoritative sites.
Derrel is a marketing consultant and serial entrepreneur and professional magician.